PGIM, Greywolf refinance vintage 2014 CLO notes; CLO AAAs surpass high-grade, CMBS yields

By Cristal Cody

Tupelo, Miss., April 3 – Two CLO managers came to the primary market to refinance vintage CLO notes on Wednesday.

Prudential Investment Management, Inc. affiliate PGIM, Inc. priced $646.75 million of notes in a second refinancing of a 2014 CLO.

Greywolf Capital Management LP sold $510.55 million of notes in a reissue of a vintage 2014 broadly syndicated offering.

CLO AAA notes now offer more yield than investment-grade corporate bonds and CMBS senior bonds, according to a Wells Fargo Securities, LLC research report on Wednesday.

“New issue CLO AAAs current offer yields over 4%,” Wells Fargo Securities LLC senior analyst Dave Preston and associate analyst Mackenzie Miller said. “While CLO AAA yields have edged close to the yields on IG and Dupers, notably in Q3 2016 and from H2 2017 to Q1 2018, according to our data, this is the first time that CLO yields actually surpassed IG or Duper yields since at least 2012.”

PGIM resets Dryden 36

PGIM priced $646.75 million of notes in a second refinancing of the Dryden 36 Senior Loan Fund/ Dryden 36 Senior Loan Fund LLC deal, according to a market source.

Dryden 36 Senior Loan Fund priced $434 million of class A-R2 floating-rate notes at Libor plus 128 basis points at the top of the capital stack.

Goldman, Sachs & Co. was the refinancing agent.

The CLO manager extended the maturity on the refinanced notes to April 15, 2029 from Jan. 15, 2028.

The CLO was originally issued Dec. 9, 2014 and was first refinanced Dec. 21, 2016.

In the first refinancing, $714.05 million of notes were priced. The CLO sold $434 million of the class A-R notes at Libor plus 142 bps at par.

PGIM originally sold $609.3 million of notes in the 2014 offering. In that transaction, the CLO priced $375 million of class A senior secured floating-rate notes at Libor plus 147 bps.

Proceeds will be used to redeem the outstanding notes on April 15.

Prudential Investment Management is the primary asset management business of Newark, N.J.-based Prudential Financial Inc.

Greywolf reprices 2014 CLO

Greywolf Capital Management sold $510.55 million of notes in its reissue of a vintage 2014 CLO deal, according to a market source.

Greywolf CLO IV, Ltd./Greywolf CLO IV, LLC priced the $320 million of class A-1 floating-rate notes at Libor plus 137 bps.

Goldman Sachs & Co. LLC was the refinancing placement agent.

The maturity was extended to April 17, 2030 from Jan. 17, 2027.

The CLO manager priced a $376.2 million first refinancing of the notes on July 17, 2017. In that reprint, the CLO sold $269.18 million of class A-1-R senior secured floating-rate notes at Libor plus 121 bps.

In the original $437.35 million deal priced on Nov. 12, 2014, the CLO sold $269.18 million of class A-1 floating-rate notes at Libor plus 153 bps.

Proceeds from the second refinancing will be used to redeem the outstanding notes.

Greywolf is an investment management firm based in Purchase, N.Y.

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